How to sell an inherited home

Get good advice before putting mom and dad’s house on the market

There’s the emotional aspect of getting a loved one’s home ready for sale — which likely includes clearing out his or her belongings and depersonalizing the rooms. There’s the financial cost of making necessary updates to attract buyers. Sometimes heirs have to deal with costly liens or other hidden problems, and there may be disagreements among siblings about the sale price.

And understandably, sometimes family members drag their feet. Images of growing up in the home with Mom and Dad prevent them from springing into action. They can’t let go.

“Everyone takes their time to deal with the passing of a loved one. And you need to take the appropriate steps to learn the market, educate yourself and have a Realtor and tax attorney who are reliable — you need someone who is going to be empathic and is there to help,” said Leslie Piper, consumer housing specialist for Realtor.com and a San Francisco real-estate agent.

Get some advice

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First, learn about the house’s status and verify your ownership, getting the advice of an estate attorney, said David Fairman, a real-estate agent with ERA Solutions Realty in Central Ohio.

“Depending on state law, and other factors, a License To Sell Real Estate may be required from the Probate Court,” said Sally H. Mulhern, an attorney and founder of the law firm of Mulhern & Scott, PLLC, in Portsmouth, N.H., in an email interview. “In addition, there will most likely be a ‘creditor claims’ period, which must pass before assets, including real estate, can be distributed to the heirs.”

Connect with a tax adviser to understand any tax implications of selling the home, Fairman added. Heirs should also check and see if there are any liens on the property.

In fact, in certain situations — including when there are environmental concerns or the mortgage is underwater (meaning the home is worth less than what is still owed by the borrower) — heirs may even choose not to accept the home at all, allowing it to go into foreclosure, said Kelly Zinser, a bankruptcy attorney in California and legal analyst for Avvo.com, a site that rates lawyers and connects them with consumers.

Those who don’t want the property should speak with an attorney about disclaiming it — and promptly, Mulhern said. The process will likely involve filing disclaimer paperwork, she said.

Assess the market

It might be clear that Grandma’s kitchen needs some major upgrading. But before doing any work, contact a real-estate agent to help you understand the local housing market.

“You have to figure out what the other houses on the street are selling for, and get an idea of what the house is worth before improvements are made,” Fairman said.

A real-estate agent can also provide some advice on what changes would be worthwhile to make. From a financial perspective, it’s often best to do the minimum amount of repairs required to secure a buyer — and allow them to get financing. (Federal Housing Administration-backed mortgages, for example, require certain safety, soundness and security requirements for homes.) See Home woes may scuttle your FHA mortgage.

If the home is in very poor shape, it’s sometimes best to market it to an investor, Fairman added. Cash buyers looking for bargains are more likely to purchase a home “as is.”

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